Crossing the Channel

The global appreciation for risk continues to rise, but that doesn’t mean insurers have it easy. One of the biggest challenges they face is staying relevant to a rapidly changing global customer base. For insurers, this is an era of heavy competition, tight margins and capricious customers. To avoid falling by the wayside and missing opportunities, a multichannel approach is essential.

In this context, ‘multichannel’ simply means different ways of selling policies. As well as direct and via a broker, customers can get insurance via online aggregators, at the bank (for example to accompany a mortgage), via telephone services and from retailers (such as on-the-spot insurance when buying a new car). Each market has specific channels that work better than others, but they still draw on the same core services and transactions.

For the modern, future-focused insurer, it makes most sense to hold productdefinitions in a central repository rather than in a separate system for each channel. This process means changes and updates to existing products and launching products to new channels are safe, quick and efficient (existing SAP customers have realized a 66% reduction in the time it takes to implement product changes). Rapidly customizable and flexible, it also means insurance companies can offer insurance to markets – whether Western or emerging – with very different channels and priorities.

Like so many other things, insurance has become a commoditized product. For insurers, it is critical to meet all channels in the most flexible fashion, to make it easy for the customer to adopt. Today’s customers don’t have the patience for long forms. They want to open an app and just say, “this is my age and I’m going to Switzerland for 10 days, give me my insurance”.

With this in mind, it shouldn’t be a big surprise that the web is the fastest-growing distribution channel, well on its way to being number one in the West and in emerging markets. For customers though, this means that expectations are high. Insurers face the challenge of leveraging disruptive tech whilst also offering exceptional service to existing customers.

Of course, it’s not all about price. It also comes down to offering products and services that meet a specific need, offer speedy resolution and so on. Quality of service is not to be overlooked. So to meet their customers’ needs, insurers need to have a deep understanding of how to deliver differentiating customer experience. Using Twitter, Facebook and other social networks to engage is only the start.

The next wave of innovation will be omnichannel insurance, which effectively combines all channels simultaneously. So an application or claim started in one channel (you might document and make a claim at the site of a road accident via your smart phone) can be picked up at any stage and continued in any other channel (online, over the phone or face-to-face) seamlessly and with no lag. A few companies are already starting to explore this approach, but in time it will be the de facto mode of providing insurance – and only really possible with a centralized system of product definition.

Ultimately, tomorrow’s most successful insurers will have two different focuses: customer-centricity and competition. Customers because matching customer needs, service levels and expectations are vital for insurers. Catering to these needs and being able to pick these up from any channel at any time needs specialized tools. And it’s a competition story too. It’s critical for insurers to be able to look at the market and move themselves towards the most popular channel. If they don’t then quite simply they’ll lose the business.

What do you think about the issues discussed here? Continue the conversation in the comments below and on Twitter @SAPforInsurance

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I just read your fantastic article and think you are completely right. I would call it the DIGITAL INSURER – all Insurers over the world are facing these omnichannel challenges and they have to tackle this e. g. by shifting parts of there business into the cloud. Fore sure, we are talking about hybrid landsscapes integrated with their backend. Therefore cloud and omnichannel are key on our SAP Insurance Road Map to help Insurers facing these challanges becoming digital.